General - The one-case concept is a process under which all components of a case remain together throughout the examination under the control of the team manager. This results in better overall case management. Team managers deal with one level of management with taxpayers on audit sites. Corporate tax departments influence and control IRS dealings with each of their subsidiaries and divisions. The IRS should employ the same one-case concept with the LMSB team manager having the overall control of the case.

Scope and effect - The entire business complex should be viewed as a whole in order to fully comprehend the scope and effect of each segment upon the other and the effect of the whole operation on the separate and collective tax liabilities of the LMSB primary case.

Actions required - Team members do not all complete their work on a case at the same time. Team members, upon the completion of their examination assignments, should:

Exception - The return of a related entity may be closed out in advance of the primary case. This is generally done at the request of the taxpayer for good and valid reasons or when agreement forms have been received and must be processed.

Documentation - Care should be exercised to provide reasonable assurance that the partial closing is in the best interest of the Service. The examination report should indicate that the entity is part of a LMSB case and should contain an explanation for the separate closing.

Time - Time spent must be closed out using Form 5344, Examination Closing Record. The team manager should keep copies of all closing documents in order to capture the results subsequent to closing.

Workpapers – Team members are encouraged to develop their workpapers to support the proposed issues in lieu of detailed explanations in the transmittal letter.

Workpapers to Appeals - Workpaper files (including computer disks) are forwarded to Appeals for their use in resolving the unagreed issues. The team manager should arrange for CIC workpapers to be returned with a copy of the Appeals report after completion of any Appeals action. This will give the team manager immediate access to files needed for subsequent examinations and to allow for completion of the final status report without interrupting case closing action.

Disposition of workpapers – CIC workpapers must be retired to the Federal Records Center no earlier than 4 years after the date of closing (AIMS Status 90). IRM 1.15.23-1 Records Control Schedule for Tax Administration – Examination (11-01-2002) provides additional guidance.

Procedures - It is important that appropriate procedures be established to permit the retrieval of LMSB case files from the Federal Records Center. For example, it may be necessary to obtain previously closed files in the event that a LMSB case is post reviewed by Treasury Inspector General for Tax Administration (TIGTA), the Governmental Accounting Office (GAO), or by a reviewing function of LMSB. Taxpayers may file claims with respect to various Federal tax issues previously closed.

Contact point to retrieve records - The team manager assigned to the CIC taxpayer should be the contact point for requests for CIC examination files. The receiving team manager should be provided with a copy of the SF 135, Records Transmittal and Receipt (see Exhibit 4.46.7-1), the box index, and other historical files from the transferring team manager if the examination responsibility is transferred.

Retrieval of Records - Retrieval of files from the Federal Records Center may be needed. The team manager should make arrangements to receive the shipment of LMSB examination files and then arrange for the files to be reviewed by the appropriate party. All files may be retrieved by completing a Form 2275, Records Request, Charge and Recharge. This form serves as a transmittal to the Federal Records Center but also is a charge out and recharge record for audit trail purposes. Form 2275 should provide the FRC with as much information as possible, i.e., name and phone number of point of contact in case the FRC has questions, accession number, location number (if known) and the number of the box. Team managers should consult with the local Records Manager if problems arise in retrieving files, and not contact the FRC by telephone.

Retrieval to other offices - Files sometimes have to be reviewed at another location. The team manager may subsequently ship the information but should control the documents by utilizing Document Transmittal Form 3210. It should be emphasized that Form 3210 should always accompany taxpayer sensitive records shipped to other offices (for example, Appeals, Counsel, LMSB Quality Measurement Staff, etc.).

Record Retirement - The Internal Revenue Manual provides detailed procedures for the retirement of IRS records, including packing records, making cartons, shipping records, and instructions for the completion of various forms. IRM 1.15 should be consulted when necessary, but ordinarily LMSB personnel should use the designated FRC or Records Manager as the primary source of information.

Cases Removed from CIC - A CIC taxpayer may be removed from the CIC program. Historical CIC workpapers should be maintained by the team manager or designee for the industry in which the taxpayer files tax returns as provided in IRM 1.15.

Responsibility - The team manager is responsible for reviewing the primary case and all effectively controlled entities that are included in the examination. Support managers are not required to perform a review of examination reports of support examinations. However, managers of specialty groups, i.e., Employment Tax, Excise Tax, Engineering, Insurance, Financial Products, TEGE, CAS, and International will be responsible for the technical/mathematical accuracy and issue development/documentation of any separate specialty reports issued.

Refund cases - Joint Committee cases should be handled by procedures outlined in the Joint Committee Procedures (See IRM 4.36).

Preparation of 30-Day Letters - The team manager has responsibility for the preparation and delivery of the 30-Day letter to the taxpayer. 30-Day Letters will be expeditiously prepared and mailed according to existing procedures. The case will be included in the 30-Day Letter suspense files at the group level and updated to status 13 on ERCS after the mailing of the 30-Day Letter to the taxpayer.

Protest - The following actions will be completed when the protest is received from the taxpayer:

Additional response time - The taxpayer may request an extension of time in which to file a protest. The team manager may approve the request based on the facts and circumstances in each case. A statutory notice of deficiency may need to be issued. The LMSB examination team or examiner should contact Centralized Case Processing for guidance.

Primary case - The team manager should forward the entire group of related entities in the case simultaneously to Appeals.

Team manager assistance - The Appeals office serving the taxpayer is responsible for consolidating all cases in the group. The team manager assists in the following ways:

Tax Returns - All returns associated with the LMSB examination should be closed in coordination with the primary examination team. This includes both those examined and those surveyed. When the taxpayer's copy of a return is inspected but not examined, appropriate comments should be made in the examination plan and planning file and in the transmittal letter to the examination report.

Employment tax returns – These returns are generally controlled by the employment tax specialist and closed by the employment tax team member assigned to the case.

Excise tax returns – These returns are generally controlled by the excise tax specialist and closed by the excise tax team member assigned to the case, except for excise tax on Form 5330 controlled by Employee Plans.

Tax exempt, pension returns – These returns are not controlled by the LMSB team. Closing is completed by the TE/GE team assigned to the case.

Other returns - Other types of returns may be controlled by other specialists that are closed separately from the income tax files.

Equitable allocation - The deficiencies arising from LMSB examinations are the result of the team effort. Examination results should be equitably apportioned. The team manager may depart from the standard formula (used by CEMIS) if a more equitable method of allocation is determined. Where possible, support or assistance team concurrence in any departure from the standard formula should be obtained.

Meetings with Appeals – LMSB team managers and agents may meet with Appeals before the Appeals process begins and after it is concluded in some circumstances.

RRA 98 – Changes brought about by RRA 98 Sec. 1001 give the taxpayer the opportunity to be a party to all taxpayer related communications between LMSB and Appeals (See Rev. Proc. 2000-43).

Not a substitute for annual appraisal - The manager of an employee detailed to a LMSB examination needs feedback for use in preparing the annual appraisal of that team member. The team manager's assessment is not intended to be a substitute for the overall performance assessment but rather is one of the factors that will be considered in the total evaluation subsequently prepared by the employee’s manager.

Contribution to the examination - Written comments should reflect not only how well the team member performed, but what he or she contributed to the team effort in planning and executing the examination.

Feedback from team coordinators – Team managers may ask for feedback from team coordinators about the work performed by team members (including specialists) assigned to their case.

25 staff days - A written assessment is required for any team member from another group who spends more than 25 staff days on an LMSB case. The team manager's assessment should pertain to the team member's contribution to the team effort and final product.

Specifics - An assessment should relate to specifics and should be informative regarding such matters as:

Information available - The team manager, with feedback from senior team coordinators, is expected to assess the work performed by each team member. To assess the performance of team members from other groups, specialists, and support agents, team managers and senior team coordinators consider the following items:

Format - The narrative form should be used in the assessment of a detailed team member's performance during an LMSB case assignment

Timing of Assessments – Normally, written assessments will be performed at the end of an examination. There may be times when a detailed employee’s manager will request feedback before the detail is completed. This could occur if the employee applies for a new job or the annual appraisal is due. Other aspects to keep in mind are:

Recognition for Outstanding Work - The team manager should recognize outstanding work and recommend awards when appropriate. Consideration should be given to the contribution of all team members in recommending awards, including individual and group awards. Remember that:

Subsequent examination - The single most important objective of the critique is to establish the groundwork for improving the quality of subsequent examinations. This can be accomplished by:

Set out in examination plan - The critique should be provided for in the Examination Plan in Section 2, Instructions to Team Members. It should identify persons who will participate in the critique and the specific areas each will cover.

Documentation - Each team member should be instructed to maintain a folder containing summaries of topics and related background material to be used in preparation for the post examination critique. This folder should be kept up-to-date throughout the course of the examination, since recollections diminish as time passes.. It should contain any subject matter which might be helpful in improving the efficiency and effectiveness of the subsequent examination such as:

Specific instructions - Team managers may want to incorporate specific instructions to ensure particular coverage. Furthermore, they should review the originally planned critique to ensure adequate coverage of modifications made to the plan and other important incidences that arose during the examination, such as previous differences or disputes involving team members and the taxpayer.

Combining with opening conference - Because the critique's emphasis is on improving subsequent examinations, combining it with the next cycle's opening conference may be a useful technique. The similarities in the objectives of the two meetings make the critique an important source of information for the next cycle's team members. Where applicable, consideration can be given to combining the two meetings or portions of them whether or not the same team manager is assigned to the subsequent examination.

Agenda - The team manager and team members should keep in mind that the primary objective for conducting the critique, is to establish the groundwork for the next examination. The recent examination must be thoroughly evaluated with emphasis on how subsequent examinations can be improved. Some of the more important topics to be discussed during the critique are listed below:

Potential offset issues - Potential offset issues that exist which should be considered by examiners in the event claims are subsequently filed by the taxpayer should be documented in this critique.

Participants - The participants should be those directly involved in the examination with a significant role. Service personnel who might attend are:

Participants - The post examination critique with the taxpayer should be held separately. Participants should include the team manager, territory manager and appropriate taxpayer officials. It may include the team coordinator, specialty managers, and higher level Service management in some cases. The team manager for the subsequent examination may also be invited.

Agenda - A list of items to discuss during the critique with the taxpayer is contained in Exhibit 4.45.7-2. Items to be discussed in the critique should be given to the taxpayer at the opening conference. The taxpayer should be encouraged to maintain critique notes during the course of the examination.

Customer Satisfaction Survey - The taxpayer should be advised that the CIC case will be part of a pre-examination survey following the pre-planning meeting and a post closing survey conducted by an outside contractor for LMSB. All responses are confidential and intended to assist LMSB in improving customer satisfaction. See Exhibit 4.46.7-3 for details on the Customer Satisfaction Survey.

Minutes - A written report is required on each case and should be prepared by the team manager at the conclusion of the post examination critique. The report should, at a minimum, include:

Preparation of Form 6095 - Carryover and Recurring Adjustment Schedule, Form 6095 or other suitable schedule which fits the particular needs of the case should be prepared at the conclusion of the examination. A copy of the schedule should be placed in the planning file for follow-up by the succeeding team.

Taxpayer’s copy - A copy of Form 6095 should be given to the taxpayer along with the schedule of required adjustments and corresponding workpapers. By providing a copy to the taxpayer, the taxpayer could:

Subsequent team - The completed schedule would be reviewed along with the Revenue Agent Report. This will provide subsequent team members with the confidence that all carryover/rollover adjustments have been identified.

Discussion of recurring issues - Agreed recurring issues should be discussed with the taxpayer during the post examination critique. Refer to IRM 4.45.7.4.6(1)(d).

Inadequate records - The taxpayer should be advised in writing relative to the areas where the accounting procedures or practices are inadequate or need to be changed. The letter should be from the Industry Director and should be directed to the principal corporate officer responsible for taxes.

Follow-up - Examination of returns filed subsequent to the receipt of the letter that indicate the taxpayer failed to correct the procedures or practices, appropriate penalties should be pursued.

File Retention - The team manager should retain the report in the planning files for use by the subsequent team manager unless an Industry Director has issued other specific guidance on the disposition of critiques.